P13-12A The income statement and unclassified statement of financial position for E-Perform, Inc. follow: E-PERFORM, INC. Statement of Financial Position December 31 2017 2018 Assets Cash $ 97,800 Held for tradinginvestments 128,000 Accounts receivable 75,800 Inventory 122.500 Prepaid expenses 18,400 Equipment 270,000 Accumulated depreciation (50.000) Total assets $662,500 Liabilities and Shareholders' Equity Accounts payable $ 93,000 Accrued liabilities 11,500 Bank loan payable 110,000 Common shares 200,000 Retained earnings 248.000 Total liabilities and shareholders' equity $662,500 E-PERFORM, INC. Income Statement Year Ended December 31, 2018 $ 48,400 114,000 43,000 92,850 26,000 242,500 (52.000) $514.750 $ 77,300 7,000 150,000 175,000 105.450 $514.750 Sales Cost of goods sold S492.780 185.460 E-PERFORM, INC. Income Statement Year Ended December 31, 2018 $492.780 185.460 307.320 116.410 190,910 Sales Cost of goods sold Gross profit Operating expenses Income from operations Other revenues and expenses Unrealized gain on held for trading investments Interest expense Income before income tax Income tax expense Net income $14.000 (4.730) 9.270 200,180 45.000 $155.180 Additional information: 1. Prepaid expenses and accrued liabilities relate to operating expenses. 2. An unrealized gain on held for trading investments of $14,000 was recorded. 3. New equipment costing $85,000 was purchased for $25,000 cash and a $60,000 long-term bank loan payable. 4. Old equipment having an original cost of $57.500 was sold for $1,500. 5. Accounts payable relate to merchandise creditors, 6. Some of the bank loan was repaid during the year. 7. A dividend was paid during the year. 8. Operating expenses include 546,500 of depredation expense and a $7.500 loss on disposal of equipment Instructions (a) Prepare the statement of cash flows, using the direct method. (b) E-Perform's cash position more than doubled between 2017 and 2018. Identify the primary reason(s) for this significant increase